The year 2021 has been a year of sustained growth and unprecedented development for the cryptocurrency market. Most investors won't be surprised that the cryptocurrency market as a whole has continued to grow steeply through 2021, increasing its overall market capitalization by more than 280% over the past 12 months. However, what few people could have predicted is the outstanding performance of large-cap altcoins.
While Bitcoin is up 95%, it is negligible compared to the returns of the best-performing large-cap altcoins.
It's not just that the market caps of the largest altcoins have grown at such exponential rates.
For a more stable measure of industry growth, consider the destination of venture capital funds. According to data provider PitchBook, more than € 17 billion has been invested in businesses operating in the space this year, which is by far the most in a single year and almost equal to the total amount raised in all of them. . Previous years combined.
This was reflected in the number of new blockchain technologies that entered the market: the number of tokens traded increased to more than 10,000 in November, double the number in April 2020.
Blockchains whose primary goal is to support smart contract functionality remain the biggest players in the altcoin space. Smart contracts are self-executing pieces of computer code that do not require human intervention or supervision. For example, smart contracts allow you to safely borrow money at around 5% per year using cryptocurrencies as collateral. Credit approval is not required and you are not required (in many cases) to reveal your name. A host of other financial applications and transaction types, such as self-executing insurance contracts, are also available on smart contract networks like Ethereum.
Ethereum has managed to maintain its first-mover advantage in the smart contract space, but is now facing legitimate competitors in the form of Solana, Cardano, and Polkadot. Each of them has seen thriving ecosystems flourish around them this year. Estimates put the value of funds “stuck” in smart contracts on these networks at around €230 billion, more than 63% of which is stuck on Ethereum alone. While that sounds like a lot, Ethereum's dominance has slowly declined in 2021, from 95% in January 2021.
There is another player in the smart contract game that has shown no signs of slowing down in 2021, Binance Coin (BNB). BNB is the native currency of Binance Smart Chain, offering an alternative to Ethereum and other smart contract blockchains are gaining ground. It got more than 7% of the total value trapped in smart contracts. It offers users much lower costs than Ethereum, with almost all the same features.
However, Binance Smart Chain faces a major hurdle in securing massive support from the crypto community. Although its speed and low costs are attractive, it is not decentralized.
Binance is a private company, while Ethereum, Bitcoin, and the like are decentralized in nature. Binance chooses who qualifies as a "validator" on its blockchain and only uses 21 validators. Founder Changpeng Zhao compared Binance to “CeDeFi” or centralized DeFi. Binance Coin is also used as a utility token on the Binance trading exchange. This explains the extraordinary rise of the BNB coin over the past year.
The rise of gaming-centric cryptocurrencies
A subset of the crypto space that is rapidly gaining public attention is the gaming-centric coin space. The biggest players in the space currently include tokens like Axie Infinity (AXS), Decentraland (MANA), The Sandbox (SAND), Gala (GALA), and Enjin Coin (ENJ).
“Some of the most exciting encryption projects take place in games,” says Hope Robertson. "Gamers are offered ways to interact with other players while earning money, and there are some clever concepts behind this new generation of cryptocurrencies coming from this sub-sector."
A look at the table below shows amazing returns on gaming crypto over a 12-month period. Axie Infinity, for example, is a blockchain-based fighting and trading game that is partially owned and operated by its players. Inspired by popular games like Pokémon and Tamagotchi, Axie Infinity allows players to collect, breed, breed, fight, and trade token-based creatures called Axies. It was established in 2018 and has built a staggering market capitalization of almost € 5.7 billion in less than three years.
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(Image credit :.)Decentraland (MANA) is an Ethereum blockchain-powered virtual reality platform that enables users to create, experience, and monetize content and applications. It allows users to purchase parcels of land that they can then navigate, build and monetize, and while it only launched in 2017, it has amassed a market capitalization of € 5.7 billion. Decentraland's “metaverse” includes more than 90.000 lots offered for purchase and development in a virtual world.
In general, the world of cryptocurrencies has continued to grow, expand, and evolve in ways that few people could have imagined in 2020. While altcoins may have gone to great lengths to steal the show this year, even Ethereum is still nowhere near it. challenge. the first place of the big brother Bitcoin by market capitalization. Tune in to Part 2 of this article, where we take a look at Bitcoin and the rise of stablecoins.
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This article is intended for informational purposes only. Opinions expressed are not and should not be construed as investment advice or recommendations. This article is not an offer, nor is it a solicitation of an offer, to buy or sell any of the assets or securities mentioned in this document. You should not invest more than you can afford to lose and, before investing, consider your level of experience, your investment objectives, and seek independent financial advice if necessary.
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